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Sri Lanka's 20-year-old civil war has ended, but many of the underlying problems remain

One-sixth of Sri Lanka consists of the Central Highlands in the south-centre. From these highlands a series of plains spread out, though rather than being flat they are traversed by a variety of ridges and valleys. Despite its relatively small size, Sri Lanka has distinct variations in rainfall, so there is a dry zone and a wet zone. The dry zone in the north and east relies for rainfall mostly on the annual monsoons. The wet zone is in the south-west. This is the heart of the country, with year-round rainfall and most of the cultivable land, as well as the bulk of industry and two-thirds of the people.

Many live close to the coast. In December 2004, however, a tsunami devastated much of Sri Lanka's coastline and killed 31,000 people.

Three-quarters of the population are Sinhalese and Buddhist. But there are also significant minorities. The largest of these are the Tamils, which in turn are divided into two groups: half are the original ‘Sri Lankan Tamils’, who are generally better educated and live in the north of the island. The other half are ‘Indian Tamils’, descendants of people who came later during the colonial period to work on the tea plantations. Another, smaller Tamil-speaking minority are the ‘Moors’, who are descendants of Arab traders. Sri Lanka's ethnic battles have primarily been between the Sinhalese and the Sri Lankan Tamils.

Despite decades of conflict Sri Lanka has been a human development success story. Education and health services are mostly free. Over 90% of the population are literate and 93% have access to basic health facilities. Notably, Sri Lanka's successes have been shared between men and women. Nevertheless, unemployment remains high and around one-fifth of the population live below the poverty line.

As a result many have migrated in search of work. Around 1.6 million Sri Lankans are employed overseas, the majority of them women domestic workers in the Middle East, who remit more than $3 billion per year.

In 1977, the government of Sri Lanka became the first in South Asia to liberalize and diversify its economy. Since then, it has seen a rapid expansion of manufacturing. This is dominated by the garments industry which now accounts for one-third of employment and produces more than half of exports. Competition is increasing from other low-cost producers but the industry has survived by concentrating on niche markets. Other important industries include footwear, food, chemicals, and rubber and petroleum products.

The world's leading tea exporter

Agriculture remains important, employing around one-third of the labour force. Two-thirds of this is directed towards the domestic market, particularly the cultivation of rice, though one-quarter of the country's rice needs have to be imported. Sri Lanka's main agricultural exports—tea, rubber, and coconuts—are grown in the wet zone. Much of the output is now by smallholders. Sri Lanka is the world's leading exporter of tea. Production of rubber has benefited from high prices and recent investment.